Legislature(2007 - 2008)CAPITOL 106


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03:04:12 PM Start
03:04:36 PM HB337|| HB345
05:06:22 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
HB 337-HEALTH CARE: PLAN/COMMISSION/FACILITIES                                                                                
HB 345-MEDICAL FACILITY CERTIFICATE OF NEED                                                                                   
3:04:36 PM                                                                                                                    
CHAIR  WILSON announced  that the  order of  business would  be a                                                               
hearing on two  bills:  HOUSE BILL NO. 337,  "An Act establishing                                                               
the  Alaska Health  Care Commission  and the  Alaska health  care                                                               
information  office;   relating  to  health  care   planning  and                                                               
information;  repealing  the  certificate  of  need  program  for                                                               
certain  health  care  facilities  and relating  to  the  repeal;                                                               
annulling certain regulations required  for implementation of the                                                               
certificate of  need program for certain  health care facilities;                                                               
and providing  for an  effective date" and,  HOUSE BILL  NO. 345,                                                               
"An Act amending the certificate  of need requirements to exclude                                                               
expenditures   for  diagnostic   imaging  equipment   in  certain                                                               
3:06:06 PM                                                                                                                    
CHAIR WILSON  informed participants that the  committee will only                                                               
hear testimony  today and  that each speaker  will be  limited to                                                               
three minutes.                                                                                                                  
3:07:49 PM                                                                                                                    
KAY  BIAS, Alaska  Representative,  Radiology Business  Manager's                                                               
Medicare   Advisory   Committee,   expressed  her   support   for                                                               
Representative Kelly's  bill as a fair  and equitable alternative                                                               
to the  present Certificate of  Need (CON) program.   The present                                                               
system does  not define a  physician's office and  physicians, in                                                               
partnership with  hospitals, have  been able to  purchase imaging                                                               
equipment without a CON, unless  they are radiologists.  Ms. Bias                                                               
explained  that   a  ruling  by   Superior  Court   Judge  Niesje                                                               
Steinkruger led to  the decision that radiologists  should not be                                                               
given the  status of a physician's  office.  She opined  that the                                                               
imaging facility in question was  not a physician's office due to                                                               
the ownership  structure: 10 percent radiologists  and 90 percent                                                               
private investors, and  other factors.  Ms. Bias  stated that the                                                               
commissioner [of the Department of  Health & Social Services] has                                                               
not looked  at the Medicare  guidelines to compare  a radiologist                                                               
physician's office and  other imaging centers.   She continued to                                                               
say that  HB 345 clearly  offers a  solution to the  restraint of                                                               
trade on  radiologists and also protects  the smaller communities                                                               
from for-profit conglomerates.   Ms. Bias urged  the committee to                                                               
support HB 345.                                                                                                                 
3:10:00 PM                                                                                                                    
JEFF COOK, Board President,  Greater Fairbanks Community Hospital                                                               
Foundation,  Incorporated, stated  his opposition  to HB  337 and                                                               
his  support of  HB  345.   He informed  the  committee that  the                                                               
Greater  Fairbanks Community  Hospital Foundation  was formed  in                                                               
1968.   Previous to  that, city and  borough of  Fairbanks voters                                                               
had turned down  the purchase of St. Joseph's  Hospital after its                                                               
closure.  The  foundation raised money and opened  a new hospital                                                               
in 1972;   it now  has 500,000 square  feet of acute  care, long-                                                               
term care, and special care  facilities.  Mr. Cook explained that                                                               
the  hospital is  owned  by  the foundation  and  is operated  by                                                               
Banner Health.   He stressed  that the 25 member  volunteer board                                                               
is  in  opposition  to  any  proposal  that  will  eliminate,  or                                                               
drastically alter, the CON program.   Fairbanks Memorial Hospital                                                               
is open 24  hours per day and provides acute  and long-term care,                                                               
emergency   services,   psychiatric   care,  care   for   chronic                                                               
inebriates,  and  treatment  for   heart,  cancer,  and  diabetic                                                               
patients; all  patients are seen  regardless of their  ability to                                                               
pay or  their insurance  coverage.   Mr. Cook  opined that  it is                                                               
only fair  to eliminate  CON if those  who offer  ambulatory care                                                               
will  also  offer 24  hour  services  to  all patients  in  need.                                                               
Fairbanks is an isolated community and  it is important to have a                                                               
wide range  of medical services,  such as the new  cancer center,                                                               
heart center,  and cath lab.   However, to continue to  offer the                                                               
best care  possible, the hospital  needs to retain  all services,                                                               
not just  the unprofitable and  inconvenient services.   Mr. Cook                                                               
re-stated the board's  opposition to the elimination  of CONs and                                                               
its support of HB 345.                                                                                                          
3:13:21 PM                                                                                                                    
CHRISTINE  SCOTT, Patient,  Advanced Medical  Centers of  Alaska,                                                               
stated  that she  is a  patient  of Advanced  Medical Centers  of                                                               
Alaska  in  Fairbanks.   She  explained  that Fairbanks  Memorial                                                               
Hospital  (FMH)  does  not  allow  all  of  the  doctors  in  the                                                               
Fairbanks area to work in the  hospital; therefore, she has to go                                                               
to Anchorage  for medical  procedures.   Ms. Scott  expressed her                                                               
belief  that an  out-patient  surgery center  in Fairbanks  would                                                               
benefit  patients  and would  not  take  business away  from  FMH                                                               
because  patients  from  the medical  center  are  already  being                                                               
treated in Anchorage.   She spoke in favor of  the elimination of                                                               
the CON program in order to encourage capitalization.                                                                           
3:15:51 PM                                                                                                                    
ANN MATTHEWS,  Fairbanks, Alaska,  expressed her support  for the                                                               
governor's  plan.     She  related  her   experience  of  getting                                                               
emergency room  care at the hospital  for the cost of  $5,000 for                                                               
one  visit.    She  opined  that the  hospital  is  a  for-profit                                                               
hospital and  nets $25  million to  $35 million  each year.   Ms.                                                               
Matthews said  that the CON  program limits choices  and variety,                                                               
and access  to medical  care, while increasing  cost.   She urged                                                               
the committee to support SB 245 and HB 337.                                                                                     
3:17:57 PM                                                                                                                    
ROD PERDUE,  Employee, Fairbanks Memorial Hospital,  informed the                                                               
committee  that  he  works at  Fairbanks  Memorial  Hospital  and                                                               
wanted to  speak from a different  perspective.  He said  that he                                                               
has lived in many communities and  places around the world.  From                                                               
the community  standpoint, the strength of  the hospital benefits                                                               
the  community in  two  areas.   He  spoke  of  the Golden  Heart                                                               
Project;  a  collaborative  effort  between the  hospital  and  a                                                               
number  of agencies  that will  build a  behavioral health  detox                                                               
center this year.   Mr. Perdue opined that  the center benefitted                                                               
from the support of the hospital,  as did the project to build an                                                               
out-patient  diabetes center  three years  ago.   He pointed  out                                                               
that he and his family live in  the  Interior due to the strength                                                               
of the  community and  the hospital is  the cornerstone  for many                                                               
activities.    Mr.  Perdue  expressed   his  belief  that  it  is                                                               
essential  for  the  well-being  of the  community  to  keep  the                                                               
hospital a strong and viable entity.                                                                                            
3:20:32 PM                                                                                                                    
MARK  ACKLEY,  Chief  Executive Officer,  Imaging  Associates  of                                                               
Providence,  expressed his  full support  of HB  345.   He stated                                                               
that the  bill will protect the  smaller, vulnerable, communities                                                               
that can not withstand the  pressure of new competition resulting                                                               
from uncontrolled growth.   In addition, the  bill will encourage                                                               
a competitive consumer-driven environment  that gives choices and                                                               
improves access to  medical services.  Mr. Ackley  opined that HB                                                               
345 will benefit  both business and patients who  are entitled to                                                               
a  choice  in health  care  decisions;  furthermore, it  provides                                                               
clear  guidelines  for new  medical  businesses  to develop  with                                                               
confidence and  sustainability.  For example,  Imaging Associates                                                               
of Providence  has twice  received permission  from the  state to                                                               
provide imaging services to Wasilla  and Anchorage.  However, the                                                               
decisions  were reversed  and now  both parties  are involved  in                                                               
expensive legal proceedings.   Mr. Ackley urged  the committee to                                                               
support HB 345.                                                                                                                 
3:23:25 PM                                                                                                                    
MIKE MCNAMARA,  M. D., Anchorage, Alaska,  informed the committee                                                               
that he is an orthopedic hand  surgeon and is also president of a                                                               
four  member  advisory   group  representing  twenty-six  limited                                                               
partner  surgeons of  the Alaska  Surgical  Center in  Anchorage.                                                               
The  center completes  about  5,500  cases per  year  and has  55                                                               
surgeons  representing 16  specialties.   Dr. McNamara  said that                                                               
about 20  percent of the  center's cases are  Medicaid, Medicare,                                                               
VA, Tri-Care and Project Access; the  latter is free care for the                                                               
underserved.  He  stated his opposition to the repeal  of CON and                                                               
his support of HB 345.   Dr. McNamara reminded the committee that                                                               
the original  purpose of  the CON  in Alaska  was to  prevent the                                                               
unnecessary duplication of development.   He pointed out that, in                                                               
Anchorage, there  are four primary surgical  centers that operate                                                               
at  around   fifty-five  percent   to  sixty   percent  capacity.                                                               
Fortunately, the community  is currently well served  by the best                                                               
surgeons,  nurses, and  support  staff.   However, allowing  more                                                               
centers  to  open  will  reduce peer  oversight  and  change  the                                                               
existing standard of  care.  Dr. McNamara pointed  out that there                                                               
is  a  nationwide  shortage  of operating  room  nurses  and  the                                                               
centers  are   already  understaffed.    He   opined  that  undue                                                               
competition  for staff  will  not lower  nursing  costs but  will                                                               
raise  costs and  overhead.   He  further  explained that  larger                                                               
centers have the power to  negotiate with insurance companies and                                                               
unions to  manage costs.   He urged  the committee not  to repeal                                                               
CON and risk the loss of  the centers of excellence in Anchorage.                                                               
Dr.  McNamara opined  that  there  is no  need  to send  patients                                                               
outside anymore.                                                                                                                
3:28:08 PM                                                                                                                    
ROBERT  BRIDGES,   M.  D.;  owner,  Aurora   Diagnostic  Imaging,                                                               
informed  the  committee  that his  private  practice  is  Aurora                                                               
Diagnostic  Imaging.      He  stated  his  support  for  HB  337;                                                               
however, he urged  consideration of some of the  components of HB                                                               
345.   His experience in  private practice and his  position with                                                               
an  open imaging  center warrants  his support  of the  repeal of                                                               
CON.   The  present system  hinders care  and the  influx of  new                                                               
medical  practices  to the  state.    In  addition, it  does  not                                                               
address quality of  care and quality assurance for  the people of                                                               
the  state.     The  major  problem  is  the   lack  of  explicit                                                               
definitions  and he  opined that  HB  345 addresses  the need  to                                                               
define what a practice really is.   Dr. Bridges indicated that he                                                               
provides  services  to  Medicare  and Medicaid  patients  and  is                                                               
uniquely qualified for certain procedures;  however, he is having                                                               
difficulty  getting  the  equipment  he  needs  due  to  the  CON                                                               
restrictions.  Dr. Bridges pointed  out the value of diversity to                                                               
bring in  different ideas and progress.   At the very  least, new                                                               
definitions and better  guidance are needed for  the selection of                                                               
new medical facilities.                                                                                                         
3:30:28 PM                                                                                                                    
MIKE PRAX, North Pole, Alaska,  stated that he wished to advocate                                                               
for  the  repeal of  the  Certificate  of  Need program  and  the                                                               
elimination of  the health  care commission.   He  explained that                                                               
CON  is  based on  three  false  premises:   that  anyone  should                                                               
override  an  individual's right  to  partake  of or  to  provide                                                               
medical services; that anyone can  override an individual's right                                                               
to partake of or provide  specific medical services; and that one                                                               
can make  a potential  life or  death decision  for another.   He                                                               
opined  that CON  is  a con  on the  public  and a  protectionist                                                               
measure for  certain facilities and  providers, who  then exclude                                                               
others  who wish  to  provide  a service.    Mr.  Prax said  that                                                               
Fairbanks Memorial  Hospital was  able to  build a  cancer center                                                               
without a proven  economical need for one; thus,  the term "con."                                                               
He pointed  out that his  personal decision is to  obtain medical                                                               
care in  the Lower  48 where  services are  better and  costs are                                                               
lower.   Mr.  Prax stated  that one  can not  override individual                                                               
decisions on  health care and  that the provision of  services is                                                               
up to the market.  He urged the committee to repeal the law.                                                                    
3:34:03 PM                                                                                                                    
JIM LYNCH,  Employee, Fairbanks  Memorial Hospital,  informed the                                                               
committee that  he has  been a resident  of Fairbanks  since 1969                                                               
and   expressed  his agreement  with the  testimony given  by Dr.                                                               
McNamara.   He then referred  to Representative  Kelly's comments                                                               
made  at the  reading  of the  bill.   Mr.  Lynch disagreed  with                                                               
Representative   Kelly's  characterization   of   the  issue   as                                                               
"hospitals  versus   docs"  and   reminded  the   committee  that                                                               
physicians are on  both sides of the issue.   Also, he stated his                                                               
belief that a  CON does not limit or  eliminate competition; with                                                               
key  government  oversight,  the  CON program  is  the  necessary                                                               
foundation that  provides the ground  rules for  competition that                                                               
creates a sustainable and lasting  infrastructure for health care                                                               
in Alaska.                                                                                                                      
3:36:10 PM                                                                                                                    
MARTY  O'LONE, Employee,  Fairbanks Memorial  Hospital, expressed                                                               
his  belief  that the  loss  of  the  CON program  would  inflict                                                               
tremendous  hardship  on the  rural  community  of Fairbanks.  He                                                               
related his experiences  as a patient in the  intensive care unit                                                               
and the emergency  room after a severe allergic reaction.     Mr.                                                               
O'Lone stated  that his care was  expensive, but the 24  hour per                                                               
day  care and  emergency room  care provided  by the  hospital is                                                               
valuable and is needed.   He  stated his opposition to HB 337 and                                                               
his support of HB 345.                                                                                                          
3:37:52 PM                                                                                                                    
REPRESENTATIVE SEATON observed  that there is support  for HB 345                                                               
and  its  exemption  of  the  diagnostic  imaging  centers  under                                                               
certain conditions.  He asked  whether the same concept should be                                                               
applied to ambulatory surgery centers,  in addition to diagnostic                                                               
imaging centers.                                                                                                                
3:38:43 PM                                                                                                                    
MR.  O'LONE expressed  his belief  that  the classifications  and                                                               
parameters of  the radiological aspect  are set  in HB 345.   The                                                               
parameters of  surgical centers,  that can  perform arthroscopies                                                               
and day surgeries, have not been determined.                                                                                    
3:39:00 PM                                                                                                                    
REPRESENTATIVE SEATON asked for  a further explanation from other                                                               
speakers who are supporting HB 345  but not HB 337.  He re-stated                                                               
his question as  to why there is support for  the elimination, or                                                               
drawing back, of the CON for  the diagnostic centers, but not for                                                               
surgery centers in those same markets.                                                                                          
3:39:34 PM                                                                                                                    
MAREE BARNEY-SUTLEY,   Fairbanks,  Alaska, stated  that she  is a                                                               
patient and a citizen of  Fairbanks.  She expressed her affection                                                               
for the hospital,  but said that she feels that  the pain doctors                                                               
in the  community should be credentialed  by the hospital.    Ms.                                                               
Barney-sutley stated her support for HB 337.                                                                                    
3:41:07 PM                                                                                                                    
ROBERT  GOULD,  Chief  Financial  Officer;  Head  of  Operations,                                                               
Fairbanks  Memorial  Hospital, told  the  committee  that he  was                                                               
speaking   in  opposition  to HB  337  and in  favor  of HB  345.                                                               
Firstly, he addressed the question  of physicians' lack of access                                                               
to Fairbanks Memorial  Hospital and said that there  was a period                                                               
of time  when pain  services were  under an  exclusive agreement;                                                               
however, that  is no longer  the case.   As of  approximately six                                                               
months ago,  the exclusive  contract was  modified, and  the pain                                                               
physicians  in   Fairbanks  have   been  invited  to   apply  for                                                               
privileges  to perform  surgeries  at the  hospital.   Mr.  Gould                                                               
opined  that  there  are  no  physicians  who  have  applied  for                                                               
privileges at this time.  Secondly,  he spoke of the value of the                                                               
CON  program  and  reminded  the  committee  of  the  claims,  by                                                               
supporters of imaging  centers, that the centers  would lower the                                                               
prices of imaging services in  Fairbanks.  He compared the prices                                                               
for three services  and concluded that the  imaging center prices                                                               
are actually higher  than those of the hospital.   Mr. Gould also                                                               
compared  costs  for  surgeries  in  Anchorage.    He  urged  the                                                               
committee to look  at the Medicaid data that is  available to the                                                               
state  and  indicated  that  this   information  will  allow  the                                                               
committee  to analyze  the cost  of services  by the  health care                                                               
providers in  the state.   He pointed  out that  competition does                                                               
not lower the  cost of health care and re-stated  his support for                                                               
HB 345.                                                                                                                         
3:46:01 PM                                                                                                                    
REPRESENTATIVE FAIRCLOUGH asked  Mr. Gould to speak  to the anti-                                                               
trust issue,  the possibility that CONs  violate anti-trust laws,                                                               
that was  brought up by the  U.S. Department of Justice  during a                                                               
previous hearing of the bill.                                                                                                   
3:46:54 PM                                                                                                                    
MR. GOULD said that he did not have a response.                                                                                 
3:47:06 PM                                                                                                                    
REPRESENTATIVE  SEATON  asked  Mr.   Gould  to  supply  the  cost                                                               
comparisons to the committee in writing.                                                                                        
3:47:13 PM                                                                                                                    
REPRESENTATIVE  KELLER  expressed  his  belief  that  competition                                                               
ultimately leads  to lower  prices.  He  asked whether  Mr. Gould                                                               
could  explain the  reason for  competition  raising health  care                                                               
3:47:50 PM                                                                                                                    
MR.  GOULD opined  that a  not-for-profit hospital  and emergency                                                               
room must take all patients,  regardless of their ability to pay.                                                               
Individual facilities take the "eight  to five" business and pull                                                               
profitable  services  away from  the  hospitals.   Therefore,  in                                                               
order  to  provide  the non-profitable  services  of  in-patient,                                                               
emergency room,  home health, and  diabetes care,  hospitals must                                                               
increase  prices, resulting  in  the  never-ending escalation  of                                                               
costs.   In addition, overbuilding and  capital expenditures also                                                               
lead to higher prices.                                                                                                          
3:49:44 PM                                                                                                                    
SCOTT  BELL,  Volunteer,  Greater  Fairbanks  Community  Hospital                                                               
Foundation, expressed  his opposition to  HB 337 and  opined that                                                               
HB 345  is a  reasonable compromise.   Mr.  Bell referred  to the                                                               
testimonies of Dr.  McNamara and Mr. Gould and  affirmed that the                                                               
CON  does  a   great  job  of  building  a   strong  health  care                                                               
infrastructure in a rural community  such as Fairbanks.  He noted                                                               
that  the hospital  uses  profits from  its  profitable areas  to                                                               
build  and provide  services to  other areas  that are  not self-                                                               
supporting.  Mr.  Bell stressed his support  for the continuation                                                               
of CON rules.                                                                                                                   
3:50:34 PM                                                                                                                    
KEVIN  DORSEY,  Fairbanks,  Alaska,  explained  that  the  reason                                                               
health care prices rise with  new competition, in the short term,                                                               
is that the CON system has been  in place for a long time and has                                                               
created  a dearth  of competition  that  will initially  increase                                                               
prices.   However,  the elimination  of CON  will begin  the long                                                               
process of  reconstruction that will  allow the economy  to catch                                                               
up.  He informed the committee  that he is a student of economics                                                               
and that  CON policies are  anti-competitive.  Mr.  Dorsey opined                                                               
that  Fairbanks  Memorial  Hospital  is  a  rich  and  profitable                                                               
hospital.    He further  stated  that  CON impairs  and  prevents                                                               
physician recruitment;  doctors of  specialty fields  are leaving                                                               
Alaska  at a  net rate  of  five to  six  per year.   Mr.  Dorsey                                                               
expressed  his disagreement  with the  idea that  Fairbanks is  a                                                               
rural community;  in fact, North  Fairbanks is growing  and, with                                                               
the gas pipeline coming, Fairbanks  Memorial Hospital will not be                                                               
able  to cope  with the  massive  growth as  Fairbanks becomes  a                                                               
major  industrial  city.   He  added  that  CON  is a  source  of                                                               
corruption that  will lead  to a  dearth of  care, and  urged the                                                               
committee's support of HB 337.                                                                                                  
3:53:30 PM                                                                                                                    
REPRESENTATIVE  GARDNER  asked Mr.  Dorsey  to  elaborate on  the                                                               
reason  why  CON policies  are  responsible  for  a net  loss  of                                                               
doctors and prevent physician recruitment.                                                                                      
3:53:53 PM                                                                                                                    
MR. DORSEY explained that doctors  have two choices: perform non-                                                               
surgical,  non-intensive  work or  work  for  the hospital.    He                                                               
opined  that  many  doctors  do   not  want  to  work  under  the                                                               
hospital's  coercive terms  and with  no basis  of comparison  to                                                               
3:54:47 PM                                                                                                                    
JAMESON  SMYTH, Fairbanks,  Alaska, related  his experience  as a                                                               
patient of the  Advanced Medical Clinic in Fairbanks.   Mr. Smyth                                                               
said that  he has  gone to Anchorage  three times  for treatments                                                               
that  he expected  to  receive  in Fairbanks.    These trips  are                                                               
expensive,  painful, and  difficult.   Mr.  Smyth encouraged  the                                                               
committee  to  reduce  cost  and difficulty  for  patients.    He                                                               
further stated  that going to  the imaging centers is  a positive                                                               
experience  as they  do not  have  scheduling problems  and do  a                                                               
great job.                                                                                                                      
3:56:41 PM                                                                                                                    
CHAIR WILSON  asked whether  the situation  was that  Mr. Smyth's                                                               
doctor  was  not  affiliated  with  the  hospital,  or  that  the                                                               
procedure could not be done in Fairbanks.                                                                                       
3:57:07 PM                                                                                                                    
MR. SMYTH answered  that one procedure could not  be performed in                                                               
Fairbanks, but  the other  two could possibly  have been  done at                                                               
the hospital.   In answer to a further question,  he said that he                                                               
was not certain of the possibilities for surgery in Fairbanks.                                                                  
3:57:44 PM                                                                                                                    
CHRISTINE PALMER, Fairbanks, Alaska,  informed the committee that                                                               
she  flew  to  Anchorage  for   surgery.    In  addition  to  the                                                               
discomfort, as  a single  parent, the  additional time  needed to                                                               
travel  is  difficult  for  her  family.   The  ability  to  have                                                               
surgical  procedures  in Fairbanks  would  help  save stress  and                                                               
3:59:45 PM                                                                                                                    
CHAIR WILSON closed online testimony.                                                                                           
4:00:00 PM                                                                                                                    
PAUL  FUHS, Lobbyist,  Alaska Open  Imaging  Center, LLC  (AOIC),                                                               
addressed the issue of HB 345  and why his client participated in                                                               
the  negotiations sponsored  by  the governor  in  an attempt  to                                                               
solve  these problems.    He  opined that,  although  HB 511  was                                                               
enacted,  there was  a  lack of  a definition  of  terms in  that                                                               
legislation; this  is corrected  by HB 345.   Mr.  Fuhs explained                                                               
that by  HB 511, physicians  are exempt from CON,  but individual                                                               
independent diagnostic testing  facilities (IDTF) are not.   As a                                                               
result, a  radiologist went  to Fairbanks  and opened  an imaging                                                               
office as  a physician's  office, thereby exempt  from CON.   Its                                                               
status was affirmed  by the commissioner of  DHSS.  Subsequently,                                                               
another  facility was  opened in  Mat-Su that  was also  deemed a                                                               
physician's  office.   Meanwhile, in  Fairbanks, the  Alaska Open                                                               
Imaging Center (AOIC) was later determined  to be an IDTF and was                                                               
closed.   The lack of a  sufficient definition in HB  511 led the                                                               
commissioner  to base  her decision  on the  presence of  certain                                                               
equipment.    Subsequent  to   that,  the  commissioner  approved                                                               
another physician owned facility.   In some cases, there has been                                                               
a transfer of ownership of a  facility in an attempt to garner an                                                               
exemption.  Because  of these rulings, lawsuits  and appeals have                                                               
been filed in  Fairbanks and in Mat-Su.  He  stated that AOIC has                                                               
always  supported the  elimination of  CON in  the major  medical                                                               
markets of Alaska; that action would  solve the problem.  In lieu                                                               
of  that   action,  Mr.   Fuhs  pointed  out   that  it   is  the                                                               
responsibility  of  the legislature  that  passed  a law  without                                                               
proper  definitions,  and  put   the  commissioner  in  a  no-win                                                               
situation, to  remedy the situation.   He urged the  committee to                                                               
define  the  terms  and  pass   the  negotiated  agreement  as  a                                                               
reasonable compromise.                                                                                                          
4:03:29 PM                                                                                                                    
REPRESENTATIVE  GARDNER expressed  her appreciation  of Mr.  Fuhs                                                               
explanation;  however, she  asked for  further discussion  on the                                                               
larger issue of whether the CON policy should be dismantled.                                                                    
4:04:19 PM                                                                                                                    
MR.  FUHS agreed  with  the need  for further  study  of the  CON                                                               
issue, but  re-stated his belief that  it is untenable to  have a                                                               
law on the books that nobody can interpret.                                                                                     
4:04:35 PM                                                                                                                    
REPRESENTATIVE ROSES  asked whether Mr. Fuhs  participated in the                                                               
CON Negotiated Regulations Committee.                                                                                           
4:04:44 PM                                                                                                                    
MR. FUHS stated  that lobbyists were not  allowed to participate,                                                               
but he did attend and was involved.                                                                                             
4:04:52 PM                                                                                                                    
REPRESENTATIVE ROSES  asked whether  Mr. Fuhs  felt, as  a biased                                                               
observer,  that  the  process  was one  that  allowed  for  equal                                                               
representation for all parties.                                                                                                 
4:05:23 PM                                                                                                                    
MR. FUHS answered no.   He explained that nine hospitals, several                                                               
physician's  offices, and  one imaging  center were  represented.                                                               
Furthermore,   negotiated   rulemaking   requires   100   percent                                                               
agreement from all parties, but  the administrator proceeded with                                                               
about  70 percent  agreement.   Facility  ownership  is the  most                                                               
difficult position  for AOIC  and HB  345 is in  the spirit  of a                                                               
painful compromise on its part.                                                                                                 
4:06:47 PM                                                                                                                    
REPRESENTATIVE GARDNER  observed that  the rule making  group did                                                               
not  include consumers  and, as  lawmakers, the  legislature must                                                               
also safeguard the best interests of Alaskan consumers.                                                                         
4:07:14 PM                                                                                                                    
MR. FUHS  agreed with Representative  Garner's statement  when it                                                               
applies  to  a  health  care commission;  however,  a  negotiated                                                               
rulemaking  [committee] includes  the providers  and participants                                                               
only, and is not a public task force.                                                                                           
4:07:32 PM                                                                                                                    
REPRESENTATIVE ROSES opined that, when a  group is given a job to                                                               
do, its  work should not be  ignored.  He asked  whether the AOIC                                                               
is  comfortable  with  the  conclusions  of  the  CON  Negotiated                                                               
Regulations Committee.                                                                                                          
4:08:02 PM                                                                                                                    
MR. FUHS  answered yes.   The only  difference his  client, AOIC,                                                               
has  is that  they are  a home  grown, Alaskan  company, and  the                                                               
requirement of 100 percent physician ownership is devastating.                                                                  
4:08:45 PM                                                                                                                    
REPRESENTATIVE ROSES  recalled that  the CON discussion  has been                                                               
going on for  years, but this is the first  agreement.  Since the                                                               
CON Negotiated  Regulations Committee has  met, there has  been a                                                               
compromise, he opined.                                                                                                          
4:09:52 PM                                                                                                                    
CHAIR WILSON asked whether, under  normal situations, 100 percent                                                               
agreement is needed for negotiated rulemaking.                                                                                  
4:10:22 PM                                                                                                                    
MR. FUHS agreed.   He added that a task  force will often release                                                               
a general recommendation.                                                                                                       
4:10:26 PM                                                                                                                    
CHAIR WILSON  further asked whether  the fact that  the agreement                                                               
was issued, with only 70  percent participation, is the reason it                                                               
was not looked at.                                                                                                              
4:10:59 PM                                                                                                                    
MR. FUHS remarked:                                                                                                              
     Chairman  Wilson, it  does, and  that's why  I believe,                                                                    
     although the commissioner hasn't  told me this, why she                                                                    
     didn't go through with it  and you know, everything was                                                                    
     agreed to  except for the  50 and  the 100 percent.   I                                                                    
     think  that's what  I could  say was  the one  sticking                                                                    
     point and  there were a  couple side agendas  there and                                                                    
     that's why that didn't go through.                                                                                         
4:11:24 PM                                                                                                                    
JEANNINE  HINMAN, Director,  Regulatory  and Government  Affairs,                                                               
Advanced  Medical  Centers  of Alaska,  expressed  her  company's                                                               
belief  that it  has demonstrated  that  repeal of  the CON  laws                                                               
will: increase the access to  medical care in the state; increase                                                               
the   quality  of   medical  care;   lead  to   better  physician                                                               
recruitment; and not  raise, but lower, the cost.   She asked the                                                               
committee to carefully review all  of the data submitted from the                                                               
interested parties and to consider  the sources of the data, such                                                               
as the  Department of Justice  and the Federal  Trade Commission,                                                               
that are the agencies that  are tasked with monitoring anti-trust                                                               
violations.    Ms.  Hinman  supported  previous  testimony  about                                                               
future  gas line  employees moving  into the  Fairbanks area  and                                                               
added  that the  anticipated  increase in  injured army  veterans                                                               
will  also  add patients  to  Alaska  that require  comprehensive                                                               
medical  treatment and  complex pain  management.   She described                                                               
the experience  of a veteran  whose injuries could be  treated in                                                               
Fairbanks with cooperation  from the local hospital.   She opined                                                               
that Fairbanks  Memorial Hospital refused to  credential Advanced                                                               
Medical Centers  of Alaska pain providers  during litigation, and                                                               
after  the  restriction  was withdrawn,  subsequent  applications                                                               
have  not been  credentialed.   Ms. Hinman  stated her  company's                                                               
support of  the governor's bill.   She concluded by  pointing out                                                               
that  according,  to  the  CON  application  of  2007,  Fairbanks                                                               
Memorial  Hospital reported  a medical  loss ratio  of 1.38  that                                                               
translates to profit margin of  38 percent; in addition, branches                                                               
in Alaska are the most profitable of Banner Health Care systems.                                                                
4:15:16 PM                                                                                                                    
REPRESENTATIVE GARDNER asked whether  Advanced Medical Centers of                                                               
Alaska provided  to the committee  the document from  the Federal                                                               
Trade Commission.                                                                                                               
4:15:33 PM                                                                                                                    
MS. HINMAN said no.                                                                                                             
4:15:39 PM                                                                                                                    
LEONARD  SISK, Physician;  Medical  Director  and Owner,  Imaging                                                               
Associates of  Providence (IAP), informed the  committee that IAP                                                               
is  a   physician's  office   and  the   physician  owner   is  a                                                               
radiologist.   The practice meets the  federal government Centers                                                               
for  Medicare   and  Medicaid   Services  (CMS)   guidelines  for                                                               
physician's offices in  which 50 percent hospital  ownership of a                                                               
physician's practice  is allowed.   He noted that  IAP physicians                                                               
also  provide  radiology   professional  services  to  Providence                                                               
Alaska Medical Center.  The hospital  was chosen to invest in IAP                                                               
and IAP supports HB 345, a  provision of which requires a minimum                                                               
50 percent  physician ownership before exempting  the office from                                                               
the state CON  process.  The bill  also requires physician-owners                                                               
to  interpret  images  in  the  facility.   Dr.  Sisk  said  that                                                               
radiology  requires  access to  expensive  machinery,  and it  is                                                               
reasonable that  not all  of the  expense should  be paid  by the                                                               
physicians;  partnerships between  physicians  and hospitals  for                                                               
radiologist's offices are allowed by  the federal government.  He                                                               
opined that  radiologists and hospitals  are natural  partners to                                                               
provide  communication between  facilities  and thereby,  benefit                                                               
patients.   The  most vocal  opponent  of this  exemption is  the                                                               
country's  largest publicly  traded  hospital corporation,  whose                                                               
shareholders  will  benefit from  the  monopoly  provided by  the                                                               
state.    Dr.  Sisk  pointed  out that  the  bill  protects  from                                                               
competition  critical  facilities  in  smaller  communities  with                                                               
populations of  less than 60,000.   He  stated his support  of HB                                                               
345  and concluded  by  pointing  out that  the  state's cost  of                                                               
imaging charges  are set  by Medicaid,  and quoting  charges from                                                               
private  insurance  is  an inaccurate  method  to  compare  costs                                                               
between providers.                                                                                                              
4:19:47 PM                                                                                                                    
CHAIR  WILSON advised  that insurance  providers have  limits for                                                               
some procedures.   She expressed  her concern that  the committee                                                               
must consider what  the fight between the  hospitals, the imaging                                                               
centers, and the surgery centers, means to patients.                                                                            
4:21:03 PM                                                                                                                    
BOB  URATA,  Physician;  Member,  Board  of  Directors,  Bartlett                                                               
Regional   Hospital,   informed   the  committee   that   he   is                                                               
representing Bartlett  Regional Hospital's  position in  favor of                                                               
HB  345.   Dr.  Urata opined  that eliminating  the  CON will  be                                                               
detrimental to  areas with  small markets, such  as Juneau.   The                                                               
increase in competition will only  be in profitable, specialized,                                                               
services;  these  specialized  centers   will  take  high  paying                                                               
private insurance  patients only and cripple  the hospital's role                                                               
as the safety net for  the community.  Strong community hospitals                                                               
are a  major part of  rescue response in  the event of  a natural                                                               
disaster.    Furthermore,  the   CON  process  ensures  community                                                               
planning that prevents  excess capacity in small  markets that is                                                               
an unwise use  of health care dollars and  ultimately will reduce                                                               
quality of  care.  Dr.  Urata referred  to a cardiac  care study,                                                               
published in 2002 by the  University Of Iowa College Of Medicine.                                                               
In addition,  studies by  American auto  manufacturers, published                                                               
by the American  Health Planning Association in  2003, found that                                                               
surgery was  cheaper in states  with CON policies.   He concluded                                                               
that CON policies protect the  consumer by assuring public input,                                                               
maintaining accessibility  to health  care and high  quality, and                                                               
helping to contain costs.                                                                                                       
4:24:45 PM                                                                                                                    
REPRESENTATIVE  SEATON asked  whether  Dr. Urata  would give  his                                                               
perspective  on  the   idea  that  the  CON   program  slows  the                                                               
recruitment, and limits retention, of doctors.                                                                                  
4:25:08 PM                                                                                                                    
DR. URATA said that he has not seen any data that supports that.                                                                
4:25:30 PM                                                                                                                    
RYAN SMITH,  Chief Executive  Officer, Central  Peninsula General                                                               
Hospital,  stated that  he was  a  member of  the CON  Negotiated                                                               
Regulation   Committee    and   that   HB   345    supports   its                                                               
recommendations.  He opined that the  bill will act to reduce the                                                               
amount  of  litigation,  which  was  one  of  the  goals  of  the                                                               
[committee].   Mr. Smith  expressed his  belief that  the surgery                                                               
centers are not  represented by the bill  because surgery centers                                                               
have not  attempted to  use the  physician's office  exemption in                                                               
order to  operate.   He spoke of  physician recruitment  and said                                                               
that recruitment in Soldotna has  been successful in the last two                                                               
years.   His experience, in  both CON  and non CON  states, leads                                                               
him  to believe  that  health care  and  community benefits  will                                                               
change under  the repeal of the  CON process.  Mr.  Smith pointed                                                               
out that  the third vote  during the negotiation process  was the                                                               
agreement to  accept a consensus of  67 percent to 70  percent of                                                               
the group; in fact, there was  an 85 percent consensus at the end                                                               
of the process.                                                                                                                 
4:27:57 PM                                                                                                                    
JOEL GILBERTSON, Representative,  Providence Health and Services,                                                               
stated that there are many big  issues in health care, and opined                                                               
that  the  health care  system  is  broken  at the  national  and                                                               
statewide level.   Mr. Gilbertson  said that, unless  health care                                                               
reform  in  the  state  is  addressed,  health  care  costs  will                                                               
continue  to escalate  and the  ability to  deliver quality  care                                                               
will be  threatened over  time.   His organization  supported the                                                               
[CON Negotiated Regulations Committee];  however, trying to solve                                                               
all of  the health care problems  through the CON process  is too                                                               
great of a task.  The  simpler question at the moment, to resolve                                                               
the conflict over the lack of  definitions in HB 511, is improved                                                               
by  the compromises  in HB  345.   Mr.  Gilbertson re-stated  the                                                               
effects  of HB  511  and stressed  that HB  345  is a  reasonable                                                               
compromise  that will,  at least,  resolve the  question that  is                                                               
causing confusion  in the  community and  conflict in  the courts                                                               
and  the administrative  hearing  process.   The  bill will  also                                                               
allow the commissioner to focus on  the bigger question of how to                                                               
address health care reform in the state.                                                                                        
4:31:00 PM                                                                                                                    
REPRESENTATIVE SEATON  observed that  the compromise  will settle                                                               
the majority of the lawsuits brought  by the imaging centers.  He                                                               
asked whether the solution for  out-patient or ambulatory surgery                                                               
centers should be offered in HB  345, in order to avoid a similar                                                               
process in the future.                                                                                                          
4:31:51 PM                                                                                                                    
MR.  GILBERTSON  explained  that  an  ambulatory  surgery  center                                                               
[(ASC)] can not  be a physician's office; therefore,  there is no                                                               
need  to   create  a  clear   standard  to  separate   between  a                                                               
physician's  office  and an  ASC  because  an  ASC is  a  clearly                                                               
defined licensed  facility at the  state and federal level.   The                                                               
question that  is not settled  is whether,  for the purpose  of a                                                               
physician  and  a  physician's   office  that  purchases  imaging                                                               
equipment,  they  are  a physician's  office  or  an  independent                                                               
diagnostic  testing   facility.     He  further   explained  that                                                               
physician's  offices  are not  licensed  and  thus, there  is  no                                                               
definition.   Moreover, the  definition under  ambulatory surgery                                                               
center has already been established.                                                                                            
4:32:54 PM                                                                                                                    
REPRESENTATIVE  SEATON  further   asked  whether  Mr.  Gilbertson                                                               
experiences recruitment difficulties with  doctors who decide not                                                               
to come  to Alaska because  they do  not choose to  be affiliated                                                               
with a hospital.                                                                                                                
4:33:32 PM                                                                                                                    
MR.  GILBERTSON   said  no.    He   acknowledged  that  physician                                                               
recruitment is  tough, there  is no  medical school  or residency                                                               
program, outside  of primary care, and  physicians graduating now                                                               
prefer  to be  employed  by  a health  care  system with  regular                                                               
schedules  and without  call responsibilities.    He opined  that                                                               
there are always changes to the  market and that CON laws are not                                                               
a legitimate excuse  for the problem of  recruiting physicians to                                                               
4:34:54 PM                                                                                                                    
REPRESENTATIVE KELLER asked  if there is data  on whether doctors                                                               
are not coming to Alaska because  they are not able to open their                                                               
own ambulatory center.                                                                                                          
4:35:27 PM                                                                                                                    
MR. GILBERTSON  pointed out that  the majority of  physicians are                                                               
recruited  to  be  community  physicians.    Federal  law  allows                                                               
hospitals to  financially support  the recruitment  of physicians                                                               
and they  work with  local practices  and providers,  even though                                                               
few  physicians  come  to  work  for  the  hospital.    In  fact,                                                               
Providence Medical  Center attempts  to recruit  approximately 30                                                               
to 40 doctors  per year into the Anchorage area.   Mr. Gilbertson                                                               
said that  he has never  heard that CON laws  are a barrier  to a                                                               
physician coming into the community.                                                                                            
4:36:56 PM                                                                                                                    
REPRESENTATIVE ROSES  referred to  the report  issued by  the CON                                                               
Negotiated  Regulations   Committee  and   read:     "Should  CON                                                               
processes and  definitions be  in alignment  with Medicare?"   He                                                               
then asked for  an explanation of how Medicare and  the state CON                                                               
policies are out of "sync."                                                                                                     
4:37:23 PM                                                                                                                    
MR. GILBERTSON responded that, at  the federal level, the Centers                                                               
for  Medicare and  Medicaid Services  have defined  what is,  and                                                               
what is  not, a IDTF  or a physician's office.   In fact,  at the                                                               
federal level, there is no  requirement that there is 100 percent                                                               
physician  ownership to  be a  physician's office;  a physician's                                                               
office can  be owned by a  physician, a physician in  a hospital,                                                               
or by a hospital.  He  opined that the CON Negotiated Regulations                                                               
Committee  was  acknowledging  that physicians,  at  the  federal                                                               
level, can have partners in running private medical practices.                                                                  
4:38:34 PM                                                                                                                    
ROD  BETIT, President,  Alaska State  Hospital  and Nursing  Home                                                               
Association (ASHNHA), expressed  his organization's opposition to                                                               
the  repeal  of  the  CON.   Mr.  Betit  called  the  committee's                                                               
attention  to  supporting  documents   in  the  committee  packet                                                               
identified as  the community benefit  report and the  analysis of                                                               
the  Department  of  Justice  report.    He  explained  that  the                                                               
community benefit  report illustrates  the size of  the financial                                                               
burden that hospitals have in  covering the uncompensated portion                                                               
of Medicaid,  Medicare, and care  for the uninsured, in  order to                                                               
keep  the  health  care  system  in Alaska  afloat.    Mr.  Betit                                                               
suggested that  the commission  will be  helpful in  figuring out                                                               
how to close the gap prior to  the elimination of CON in order to                                                               
level  the playing  field.   He pointed  out that  there is  $150                                                               
million in  the report  and the  regional information  comes from                                                               
across the state.  Furthermore,  the commission can use the price                                                               
reporting information  to see whether  increased choice  leads to                                                               
lower cost.   Mr. Betit noted that ASHNHA reports  its prices and                                                               
the  comparisons will  show that  lower cost  is not  the result.                                                               
Having  this accurate  and unchallenged  information from  all of                                                               
the  parties  will  lead  to   a  clearer  understanding  of  the                                                               
situation.   He  opined that  HB 345  will close  the gap  on the                                                               
problem for imaging areas and  re-stated that the ASHNHA Board of                                                               
Directors supports the bill at this point in time.                                                                              
4:42:25 PM                                                                                                                    
NORMAN  STEPHENS,   Chief  Executive  Officer,   Mat-Su  Regional                                                               
Medical Center (MSRMC),  informed the committee that  he was part                                                               
of  the CON  Negotiated Regulations  Committee and  expressed his                                                               
disappointment that its  work went out the window.   He disagreed                                                               
with previous  testimony and said  that there were  six hospitals                                                               
represented  and  that  the  balance  of  the  participants  were                                                               
representing  many of  the parties  in  the legal  disputes.   He                                                               
opined that,  even though  there was  tension, the  committee was                                                               
effective; however, a 66 percent  consensus is insufficient for a                                                               
permanent solution to the problem.   Mr. Stephens referred to his                                                               
earlier  testimony and  expressed his  belief that  the CON  will                                                               
reduce  costs.   Furthermore,  he said  that a  lot  of what  has                                                               
happened will lead  to a slippery slope of future  conflict.  One                                                               
of the problems is that  competing centers, that are exempt, know                                                               
about the  conflicts and have  taken advantage of  the situation.                                                               
Mr.  Stephens emphasized  that  MSRMC has  built  a $101  million                                                               
hospital for  the Mat-Su valley,  followed the rules, and  is now                                                               
being  damaged by  an  imaging  center that  did  not follow  the                                                               
4:46:27 PM                                                                                                                    
RICHARD  COBDEN,  M.  D.;  Chief   of  Medical  Staff,  Fairbanks                                                               
Memorial  Hospital (FMH),  informed the  committee that  he is  a                                                               
practicing orthopedic surgeon, in addition  to being the Chief of                                                               
Medical  Staff   at  FMH.     He  stated   that  he   works  with                                                               
Representatives Kelly and Kawasaki and  was surprised that HB 345                                                               
was represented as  being agreed to by everyone.   He opined that                                                               
the rest  of the  surgeons, included 90  percent of  the surgeons                                                               
who are not in  favor of the CON, did not  join in the consensus.                                                               
Dr. Cobden  said that  HB 345 will  simply exempt  the diagnostic                                                               
imaging centers,  and several already  exist.  He stated  that HB                                                               
345 is  not a compromise  bill.  Furthermore, physicians  can not                                                               
be  recruited   to  come   to  Fairbanks,   partly  due   to  CON                                                               
restrictions,  and partly  due  to  the location.    In the  last                                                               
eighteen  months,   Fairbanks  has   lost  six   physicians,  who                                                               
relocated to  areas where  they could  practice in  an ambulatory                                                               
surgical  center.    The  situation is  very  difficult  and  has                                                               
resulted in  specialty care by  visiting physicians.   Dr. Cobden                                                               
explained  that  the original  reason  for  the  CON law  was  to                                                               
control  capital costs,  which it  no  longer does.   The  second                                                               
reason, cost-shifting, to cover the  cost of charity and indigent                                                               
care,  is a  hidden number.   Dr.  Cobden referred  to the  book,                                                               
"Mired  in the  Health Care  Morass",  by Neil  Davis, and  cited                                                               
that, according  to the author,  1.3 percent of FMH  revenue goes                                                               
to charity and  indigent care; total revenue is  $187 million per                                                               
year; FMH  profit is 12 percent  per year.  The  hospital charges                                                               
profitable  services   to  pay  for   the  areas  that   are  not                                                               
reimbursed; however,  these charges have no  oversight, or rules,                                                               
and are  not subject  to regulation.   He opined  that this  is a                                                               
taxing authority that  should be held by the  legislature, not by                                                               
hospitals.  Finally,  the idea of bringing new  physicians to the                                                               
state,  when  the state  does  not  allow  them to  make  capital                                                               
investments  in their  businesses, is  discouraging.   Dr. Cobden                                                               
warned that the state will end  up with the best hospitals in the                                                               
nation, but with  no physicians.  He urged the  committee to pass                                                               
HB 337 and deal with problems separately.                                                                                       
4:52:01 PM                                                                                                                    
REPRESENTATIVE FAIRCLOUGH  asked whether Dr. Cobden  was speaking                                                               
on behalf of the hospital.                                                                                                      
4:52:27 PM                                                                                                                    
DR. COBDEN said no.   He clarified that he is  the Chief of Staff                                                               
and   oversees  the   credentialing   and   recruitment  of   new                                                               
physicians.   Dr. Cobden disagreed  with previous  testimony that                                                               
there have been  no applications for credentialing  from the pain                                                               
4:52:51 PM                                                                                                                    
REPRESENTATIVE FAIRCLOUGH  observed that  Dr. Cobden said  "we do                                                               
not support  HB 345" but  that previous testimony from  three FMH                                                               
employees does support HB 345.                                                                                                  
4:53:21 PM                                                                                                                    
DR. COBDEN  explained that he is  the Chief of Medical  Staff and                                                               
is not speaking for the hospital.                                                                                               
4:53:56 PM                                                                                                                    
REPRESENTATIVE SEATON asked whether  the previous testimony, that                                                               
stated that HB 345 does not  need to deal with ambulatory surgery                                                               
centers, is valid.                                                                                                              
4:54:32 PM                                                                                                                    
DR. COBDEN opined  that ambulatory surgery centers  should not be                                                               
excluded from  legislation; in  fact, ambulatory  surgery centers                                                               
could be substituted  for imaging centers in the bill.   There is                                                               
separate   licensing  after   ambulatory   surgery  centers   are                                                               
established;  however, the  bill does  not address  those issues.                                                               
Dr. Cobden  stressed that  the overlying  issue of  CON policies,                                                               
and resolution of the expensive lawsuits, remains.                                                                              
4:55:20 PM                                                                                                                    
REPRESENTATIVE  SEATON asked  whether ambulatory  surgery centers                                                               
can be added into the language of  HB 345 to take care of some of                                                               
those problems.                                                                                                                 
4:55:29 PM                                                                                                                    
DR. COBDEN concurred,  and then suggested that  this addition may                                                               
lead to consensus.                                                                                                              
4:55:43 PM                                                                                                                    
JOHN  BRINGHURST,  Chief  Executive Officer,  Petersburg  Medical                                                               
Center, spoke  in favor of HB  345 as a reasonable  compromise to                                                               
doing away  with CON legislation.   He said that his  35 years of                                                               
experience as a hospital administrator  have convinced him that a                                                               
CON law instills benefits that  outweigh its costs.  Intuitively,                                                               
it would  seem that open  competition would lead to  lower costs;                                                               
however, the health  care industry does not  always follow logic.                                                               
Mr. Bringhurst gave  the example of two hospitals  in a community                                                               
of 28,000  people in Oregon.   Although the hospitals  were below                                                               
capacity,  there  was  a  joint venture  partnership  to  open  a                                                               
surgery center.  This action led  to a loss of surgical volume at                                                               
the hospitals that was less  than the increase of surgical volume                                                               
at the surgery center.   Mr. Bringhurst expressed his belief that                                                               
physician  ownership and  self-referrals  lead to  a conflict  of                                                               
interest and  over-utilization.  Furthermore, when  doctors self-                                                               
refer there  may be no cost  competition.  He explained  that the                                                               
hospital  was  left with  a  lower  volume  of service  and  more                                                               
complex cases.   He then pointed  out that the small  hospital in                                                               
Petersburg is not  rich and will have a $900,000  loss this year.                                                               
Finally, Mr.  Bringhurst opined  that CON  does not  exclude, but                                                               
allows the  community to  have a choice  in whether  services are                                                               
needful and will lower cost.                                                                                                    
5:00:14 PM                                                                                                                    
CHAIR  WILSON asked  for the  number of  surgeries that  resulted                                                               
after opening the ambulatory surgery center.                                                                                    
5:00:33 PM                                                                                                                    
MR. BRINGHURST stated that the  surgical volume at the ambulatory                                                               
surgery center was higher than  the losses to the previous levels                                                               
at both hospitals, with no increase  in population.  He said, "It                                                               
does create  a situation where  somehow, surgeries were  just ...                                                               
5:01:08 PM                                                                                                                    
REPRESENTATIVE  CISSNA  compared  this to  a  personal  situation                                                               
whereby she  received more referrals  for further  services after                                                               
obtaining insurance coverage.                                                                                                   
5:01:39 PM                                                                                                                    
MIKE   POWERS,   Administrator,  Fairbanks   Memorial   Hospital,                                                               
informed  the  committee  that  he  is  extremely  proud  of  the                                                               
progress  the hospital  has  made  due to  the  planning that  is                                                               
possible under  CON.   He stated  that FMH has  a long  record of                                                               
success that includes:  a long-term skilled nursing  facility;  a                                                               
cancer center; an out-patient surgery  center; an imaging center;                                                               
cardiac cath  care; electronic medical records;  nurses training;                                                               
and  a  comprehensive  recruiting  program.    This  progress  is                                                               
related to the logical planning provided  by CON law.  Mr. Powers                                                               
then explained that the DHSS  recently authorized the addition of                                                               
eight  operating rooms  in the  Fairbanks area.   The  hospital's                                                               
appeal of  this crippling action  resulted in the  final approval                                                               
of two additional operating rooms; although this is still too                                                                   
many, Mr. Powers opined that the system worked.  He urged the                                                                   
committee for more support of the planning function at DHSS.                                                                    
5:04:46 PM                                                                                                                    
CHAIR WILSON closed testimony on both bills.                                                                                    
5:06:22 PM                                                                                                                    
[Although not formally stated, HB 345 and HB 337 were held                                                                      

Document Name Date/Time Subjects